Under Armour sees 25% jump in third-quarter earnings

Lorraine Mirabella, The Baltimore Sun

Booming Under Armour Inc. announced Thursday that it earned $57 million in the third quarter, a 25 percent jump over the year-earlier period that was driven by strong demand for men's, women's and youth apparel and growing acceptance of the brand's footwear.

Revenue surged nearly as much — 24 percent — at the Baltimore-based sports apparel maker, to $575 million in the three months ended Sept. 30.

In last year's third quarter, Under Armour made $46 million on revenue of $466 million. On a per-share basis, the company earned 54 cents, up from 44 cents. The results topped analysts' consensus estimates by two cents.

Despite topping expectations, Under Armour's stock dropped 6.5 percent in New York Stock Exchange trading on Thursday, closing down $3.69 at $52.93 a share.

The decline may be attributable to the company's conservative early projection for 2013. During a conference call with analysts Thursday, Brad Dickerson, the company's chief financial officer, said it expects revenue to be at the lower end of its long-term growth projections of 20 percent to 25 percent.

"We are a growth company, one that in seven years in the public markets has proven our ability to patiently unlock the power of the next great global athletic brand," said Plank during the conference call. "When we innovate and add value for the athlete, we win."

Growth occurred in all sectors for Under Armour, with apparel up 22 percent to $445 million, footwear up 21 percent to $63 million, and accessories up 37 percent to $54 million. Under Armour's direct sales to consumers also surged, rising 31 percent year-over-year.

The three-month period marks the company's 12th consecutive quarter with apparel growth of more than 20 percent and the 10th consecutive quarter of net revenue growth over 20 percent, Plank said.

Plank said footwear products such as the company's Spine running shoes and Highlight cleats, both introduced this year, have been popular with consumers and athletes. Building on that success, Under Armour is set to launch the Highlight trainer, a $150 training shoe, as well as additional footwear.

In women's apparel, new products such as the Armour Bra and the Studio line of indoor fitness and training pants and tops have sold well in stores, Plank said. Under Armour has begun selling women's apparel in 300 Macy's and 150 Dillard's department stores, he said.

Those products are "helping us bring new female consumers into the Under Armour brand every day," Plank said.

In men's apparel, the training, hunting and underwear categories led the way during the third quarter, Dickerson said. Under Armour has begun selling men's underwear in 500 department stores over the past year, he said.

Under Armour opened four new factory stores in the third quarter and plans to open five more in the last three months of the year, bringing the total to 101 stores by year-end, Dickerson said.

The company also continues to develop strategies to expand internationally, Plank said. Part of the challenge, he said, is finding retail partners outside the United States that are a good fit for the brand.

"I believe that Under Armour should be everywhere," he said on the conference call. "We need a strategy in every place where the consumer is shopping and thinking about sweating."

The company also revised its financial outlook for the full year, saying it expected to generate income of about $207 million on sales of $1.82 billion in 2012. It had projected income of $205 million to $207 million and revenue of $1.8 billion to $1.82 billion.